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223 SCRA 459


Spouses  Hipolito  applied  for  and  was  granted  a  loan  by  the  bank,  which was  secured  by  a  promissory  note.    For  failure  to  pay  their  monthly payments, they were declared in default.

The spouses denied having any liability.  They stated that the real party-in-interest  is  the  sister  of  the  husband,  Pilarita  Reyes.    The  spouses,  not having received part of the loan, were mere guarantors of Reyes.  As such, they protested against being dragged into the litigation.

The trial court held that they were liable as accommodation parties to the promissory note.  This was reversed by the Court of Appeals.


An accommodation party is one who has signed the instrument as maker, drawer, indorser, without receiving value therefore and for the purpose of lending  his  name  to  some  other  person.    Such  person  is  liable  on  the instrument to a holder for value, notwithstanding such holder, at the time of the taking of the instrument knew him to be an accommodation party.  In lending his name to the accommodated party, the accommodation party is  in  effect  a  surety  for  the  latter.    He  lends  his  name  to  enable  the
accommodated  party  to  obtain  credit  or  to  raise  money.    He  receives  no part  of  the  consideration  for  the  instrument  but  assumes  liability  to  the other parties thereto because he wants to accommodate another.

In the case at bar, it is indisputable that the spouses signed the promissory note to enable Reyes to secure a loan from the bank.  She was the actual beneficiary of the loan and the spouses accommodated her by signing the